JB Hi-Fi share price jumps 5% after smashing first-half earnings estimates

The JB Hi-Fi Limited (ASX: JBH) share price is having a strong start to the week.

In morning trade, the retail giant’s shares are up 5% to $59.57.

Investors have been buying the company’s shares following the release of its half-year results.

JB Hi-Fi share price jumps on half-year results

For the six months ended 31 December, JB Hi-Fi reported:

• Total sales down 2.3% to $5.16 billion
• Earnings before interest and tax (EBIT) down 20% to $386.7 million
• Net profit after tax down 20% to $264.3 million
• Earnings per share of 241.8 cents
• Interim dividend down 20% to 158 cents per share

What happened during the half?

During the first half, JB Hi-Fi reported a modest 2.3% decline in total sales to $5.16 billion.

This was driven by a 9.9% decrease in The Good Guys sales to $1.39 billion, which offset a 0.7% increase in JB Hi-Fi Australia sales and a 5.1% lift in JB Hi-Fi New Zealand sales.

In respect to The Good Guys business, its dominant Home Appliance categories remained resilient, but the Consumer Electronics categories were softer as they cycled elevated demand in the prior corresponding period.

Over at the key JB Hi-Fi Australia business, its modest sales growth reflects continued customer demand for technology and consumer electronics products, supported by well-executed Black Friday and Boxing Day promotional periods.

On the bottom line, JB Hi-Fi’s net profit after tax was down 20% to $264.3 million for the half. This was driven largely by margin weakness due to inflationary cost pressures.

How does this compare to expectations?

While the company may have posted a sharp decline in profits, it was still well ahead of expectations. This explains why the JB Hi-Fi share price is charging higher today.

Commenting before the results, Morgans was spot on with its suggestion that the company could surprise to the upside. It said:

We think there’s a good chance JB Hi-Fi could surprise positively in its 1H24 result. We forecast EBIT of $371.0m, 4% above consensus of $358.2m.

Management commentary

JB Hi-Fi’s Group CEO, Terry Smart, was pleased with the company’s performance. He said:

We are pleased with our performance as we cycled the elevated customer demand in the prior year. As expected, we saw the trading environment become more challenging, marked by heightened competitive activity and increased on-floor discounting. Our focus remained on maximising customer demand through delivering consistently high levels of customer service and driving best value for our customers.

Outlook

No guidance has been given but management has provided a trading update.

During January, JB Hi-Fi Australia sales were up 2.5% with comparable sales growth of 1.7%, JB Hi-Fi New Zealand sales were up 8.2% but comparable sales were down -4.1%, and The Good Guys sales down 2.2% with comparable sales down 2.2%.

Terry Smart adds:

In a challenging retail environment, we continue to adapt and innovate to maximise the opportunities it gives us. Our unwavering focus on delivering value for our customers by leveraging our established and proven low-price market position and providing exceptional customer service continues to ensure we remain top of mind for shoppers. This strategy not only ensures our continued relevance to our loyal existing customers but also drives the expansion of our market share.

The JB Hi-Fi share price is up 33% since this time last year.

The post JB Hi-Fi share price jumps 5% after smashing first-half earnings estimates appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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